The price of foreclosed property is often less than market value.
When a property owner fails to make the mortgage payments, the house goes through foreclosure and is sold at a county foreclosure auction. If the minimum bid is not reached, ownership of the property reverts to the mortgage holder and is known as REO, real estate owned property.
House Occupancy
If the house is bought at a foreclosure auction, the previous owners may still be living in the house. The new buyers must follow state laws to evict the pervious owners. Usually REO properties are not occupied when offered for sale.
Condition of House
The foreclosure process is lengthy and the owners may have few funds for house repair or general maintenance during that time. A thorough house inspection prior to purchase is necessary to identify the problems and estimate the repair costs.
Winterization
If the house is located in an area with below freezing temperatures, inspect the plumbing for broken pipes. When houses are not winterized during freezing weather, the water in the pipes may freeze, expand and crack the pipes.
Landscaping
Foreclosed homes may have dead or dying lawns, trees and shrubbery. The cost and labor to properly landscape the property is an important consideration.
